The final chapter of 2022 is already in sight, marking the end of one of the strongest years for commercial real estate. But what will 2023 look like? In today’s post, we discuss four trends that will shape the industry in the near future.
4 Commercial Real Estate Trends To Watch in 2023
Most experts agree: the commercial real estate market will “normalize” in 2023. In other words, while occupation will remain high, the sometimes prodigious growth experienced during 2022 and 2021 (notably in the warehousing sector) is behind us.
With this background in mind, here are four ideas you need to know to make sense of the CRE market over the next 12 months.
After the harshest phase of the pandemic, the world seems to be entering a new stage. But that doesn’t mean that the challenges are over. On the contrary, new roadblocks have appeared on the horizon. These include an unpredictable geopolitical environment due to the war in Ukraine, rising interest rates, high inflation, and the looming fear of a recession.
2. Industrial and Multifamily Real Estate Will Still Be Dominant
In times of growing uncertainty, investors tend to turn to the safest, time-tested alternatives. In the case of commercial real estate, this means that in 2023 multifamily and industrial will remain the two categories preferred by investors and developers.
3. E-Commerce Will Cool Down While Remaining a Driving Force
A surge in e-commerce transactions due to the pandemic powered the unprecedented growth in demand for warehouse space registered over the last two years. But even if consumers are slowly reverting to some of their pre-pandemic habits, projections show that e-commerce’s share of total retail sales will grow at a steady pace from the current 19.5% to 32.1% in 2032.
4. Reshoring and Nearshoring
The pandemic laid bare the drawbacks to relying exclusively on China for manufacturing. As a consequence, many companies are adopting a “China plus one” policy and reshoring/nearshoring some of their production lines. This will directly benefit countries like Mexico and Canada, while stimulating demand for industrial space located near U.S.ports or on the routes to and from Mexico.
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